Keeping a balance between intellectual property rights and public welfare has been a major discussion under international law in the last three decades. The countries in their domestic spheres have implemented IP rights in their municipal laws especially the pharmaceuticals while simultaneously trying to create a balance and protect the interests of the inventors while keeping public health in perspective. However incidental encroachments have been a topic of concern that the developing as well as undeveloped nations have found in the national and international arena. To address the issue of patent rights, the TRIPS (Trade-Related Aspects of Intellectual Property Rights) agreement was adopted in 1995 which was a minimum standard multilateral agreement among all nations who were the members of World Trade Organization (WTO). It protected the seven-fold distribution of IP rights, including patents, trademarks, copyright, industrial design, GI, integrated circuits& trade secrets. TRIPS required its member states to implement strong regulations in their laws on IP rights with limitations and exceptions for the developing and underdeveloped member states to trade with other nations and give space for new incentives and creativity to flourish. In a developing country like India where access to medicines and healthcare at affordable prices is a fundamental right under Article 21, the compliance of the agreement with the domestic sphere has led to changes in the industry.
Globalization has been a strong force in enabling trade-related practices all over the world. Pharmaceuticals have been a major part of trade worldwide, from developed to underdeveloped countries. The TRIPS agreement introduces global minimum standards for protecting all forms of intellectual property rights. Before the agreement, there were no specific standards for patents and owners’ rights, however, with the introduction of the agreement, pharmaceutical data is now being protected against “unfair common use.” All WTO members are required to adapt their laws to the minimum standards set for IPR protection. By putting IPRs inside the WTO and making them concerned about its binding dispute procedure, proponents of a sturdy IPRs regime have made it possible for non-compliant WTO Members to face trade sanctions in any area if they fail to live up to its rules. The TRIPS Agreement also includes for the first time in any area of international law “rules on domestic enforcement procedures and remedies”. The requirement for strong rules and regulations has been a difficult step for the developing as well as the least developed nations who depend on the developed nations for the supply of their medicines in the industry.
The exclusive rights provided in the TRIPS agreement however give less space to flexibilities related to public access thus creating an imbalance in the international realm of pharmaceutical rights majorly in case of a natural calamity. The Doha Declaration reaffirmed the countries’ right to use TRIPS safeguards such as compulsory licenses/parallel importation to overcome patent barriers, promote access to medicines, and guide countries in their use. In other words, the declaration does not open new avenues within TRIPS but confirms the legitimacy of measures seeking to use to the largest extent possible the in-built flexibility found in TRIPS. The Declaration extended the deadline by which the least developed countries had to grant and enforce pharmaceutical patents.
Protecting the interests of a creator while simultaneously managing public welfare and providing access to medicines worldwide has been part of major discussions in the realm of International Law. This discussion gained more momentum during the pandemic when various nations including India wanted to seek a waiver for the strong intellectual property regulations to make access to medicines easier for the poor and underdeveloped nations including the vaccinations.
India And The Patent Laws Regarding Medicines
As a member of WTO, India had to amend the Indian Patent Act 1970 and fulfil its obligation in three amendments to the Indian Patent Act 1999, 2002, and 2005.
The Indian Patents Act,1970
The Indian Patents Act was passed at the beginning of the 1970s by the Indira Gandhi administration to provide the nation’s impoverished with more affordable access to medications. Process patents, but not product patents, would be recognized under the Act. If expressed differently, India would grant patents on the method used to make the drug rather than the specific drug itself. This permitted Indian pharmaceutical businesses to produce the same medication using other procedures—a process known as reverse engineering. New pharmaceuticals could be made available to the nation at reasonable prices because Indian companies spent little money on their creation and research.
The 2005 Amendment
The amendment of 2005 struck down the “process patent” regime and introduced the “product patent” system. After the Amendment, generic industries that did reverse engineering were not allowed. While inexpensive pharmaceutical access is a crucial component of the right to health, rising costs are having an impact on accessibility in developing nations like India, where a sizable portion of the population lives below the poverty line.
The Indian Patent laws were amended thrice to follow the TRIPS agreement. These amendments started in 1995 and continued till 2005.
1st Amendment (1999)
The 1st Amendment brought the Mailbox procedure in India (According to Article 70.9 of the TRIPS agreement). It enabled pharmaceutical inventions to be accepted and put in the mailbox to be examined in 2005.
2nd Amendment (2002)
The 2nd Amendment brought the principal rule of a 20-year patent term. The burden of proof for the process of patent infringement was reversed. The qualifications for compulsory licensing were modified.
3rd Amendment (2005)
The 3rd Amendment gave full protection to pharmaceutical products.
The 3rd Amendment can be said to have affected India by directly restricting the availability of affordable drugs and by indirectly eliminating the generic competition that had survived so long by providing patented medicines at an affordable price.
Right to Health in India
The “Right to life” under Article 21 in the Indian Constitution extends to the “Right to health” interpreted by the judiciary as a fundamental right. Since the right to health is a part of the right to life as a fundamental right, the government has to provide facilities and accessible healthcare. Therefore, the government must ensure that the patent holders do not exercise their exclusive rights over their patented products for a long time, giving them unfair exploitation of the patent.
It is significant to note that, in contrast to the situation in developed nations, where strong regulations like antitrust laws are already in place with the minimum standards provided in TRIPS, the legal framework to stop anti-competitive activities are either underdeveloped, underutilized, or non-existent in several developing nations like India. The right to health is often the only effective tool available to prevent pharmaceutical firms from abusing their patent rights in poor nations like India. Developing nations must come up with plans to stop the current situation in international patent law. The right to health can be used to restore some policy space for poor countries to build their own patent rules amid escalating calls for tougher patent regulations.
Novartis AG vs Union of India
The Supreme Court in Novartis AG vs Union of India confirmed the right of India’s parliament to implement public health safeguards available under the Agreement of Trade-Related Intellectual Property Rights (TRIPS).
Facts – In 1998, Novartis AG, an international pharmaceutical company, applied as per the TRIPS agreement before the Madras Patent Office for granting a patent for an anticancer drug named ‘Glivec’. The fact was that another drug under the name Zimmerman patent existed used for the same purpose as ‘Glivec.’ The Madras Patent Office rejected the application because the innovation lacked novelty and failed to satisfy the test of non-obviousness. It was held that the drug is not patentable under Section 3(d) of the Patents Act as it did not have any significant therapeutic efficacy over its already existing form.
In its two writ petitions filed before the Madras High Court under Article 226 in 2006, Novartis stated that Section 3(d) of the Patents Act was unconstitutional.
It reasoned the same by arguing that the Section violated Article 14 of the Constitution and was also non-compliant with the TRIPS agreement.
In 2007, the case got transferred to the Intellectual Property Appellate Tribunal (IPAB). In its decision, the tribunal stated that the drug had passed the test of novelty and non-obviousness, but it could not be patented as it was held as a non-patentable drug by way of Section 3(d). In 2009, Novartis filed a Special Leave Petition (SLP) before the Supreme Court.
Issue – The issue was to ascertain the meaning of a known substance and efficacy under Section 3(d).
Judgment – The Supreme Court in 2013 held that the beta crystalline form of Imatinib Mesylate is a new form of the known substance, that is, Imatinib
Mesylate, and that the word efficacy referred to therapeutic efficacy. As a result, the Novartis drug showed no increase in therapeutic efficacy and hence cannot be patented.
Thus, the Supreme Court’s judgment attempted to avoid the evergreening of patents. Large pharmaceutical companies tend to make small and inconsequential changes to the already patented drugs, claiming patent rights over 20 years. This is an unsustainable practice, especially in a developing country like India, where the population is high, and there is a need for life-saving drugs every day. Moreover, the availability of medicines at a cheaper rate is critical, which would not be possible if the companies continued to hold patent rights.
Bayer Corporation v. Natco Pharma Ltd
Facts – Bayer was a pharmaceutical company that held the patent rights over an ingredient ‘Nexavar,’ which was used to treat liver and kidney cancer in 2008. Natco then applied to the controller for a compulsory license to manufacture this drug. It reasoned that Bayer had failed to meet the adequate medicine supply. Furthermore, it stated that the drug was not available at a reasonable price and was not manufactured in India.
The controller considered the conditions and made the following observations:
- Reasonable requirements of the public: Even after the expiry of three years from the date of the grant of the patent, the drug was not imported as per the requirement. Further, it was available only to 2% of the consumers. Hence the public’s demand remained unfulfilled.
- Affordability of the drug: A primary reason why consumers did not purchase the drug was its cost, Rs.2,80,000 per month.
- Not manufactured in India: Functioning in Indian territory would also require manufacturing to a reasonable extent in India. Yet, even after four years, Bayer failed to manufacture the drug in India and only imported it.
As the conditions in Section 84 were satisfied, the controller granted a compulsory license to NATCO.
Thereafter in May 2012, Bayer appealed against the Controller’s order before the Intellectual Property Appellate Board (IPAB), wherein Bayer among other reasons also pointed to the fact that another pharmaceutical company Cipla had started selling its generic version at a lower price, rendering the compulsory license unnecessary as the drug was indeed available at a reasonable price. IPAB in September 2012 came up with its decision in which it dismissed Bayer’s petition against Natco over the manufacture of Nexavar and observed that “if the stay is granted, it will jeopardize the interest of the public who are in the need of the drug. The appellant has not made out any case for granting a stay.” Also, it was stated by IPAB that “The appellant cannot ride piggyback on, or take shelter under, the sale by Cipla. It is the duty of the patentee that its supply be made available at a reasonable price to the requirement of the public”.
On 15 July 2014, the Bombay High Court confirmed the findings of the IPAB. Bayer filed a special leave petition against the Bombay High Court’s decision with the Supreme Court of India, which however dismissed the petition and upheld the compulsory license.
The decisions in the Novartis and Bayer case are important because they highlight that it is no longer acceptable to the global public that hundreds of millions of people are denied access to life-saving drugs because of monopoly pricing. The case shows that governments in developing countries with some economic and political clout, such as India, are prepared to fight the big pharmaceutical companies. Section 3(d) of the Patents Act, of 1970 was amended to ensure that patented products do not stay patented for a long time by making minor or insignificant modifications.
In conclusion, it can be stated that in a country like India where half of the population has trouble affording good health and access to medicines, Article 21 plays a major role. It guarantees the protection of life and personal liberty to every citizen. Since the right to health is integral to the right to life, the government has an obligation to provide health facilities. Therefore, the government must ensure that the patent holders do not exercise their exclusive right over their patented products for a long time, giving them unfair exploitation of the patent. People must be able to access and afford life-saving drugs. While ensuring that the inventors are given their patent rights and their accompanying benefits, it is also vital to keep in mind the rights of the people.
This article is written and submitted by Sakshi during her course of internship at B&B Associates LLP. Aditi Raj is a BA LLB 4th year student at Dr. BR Ambedkar National Law University, Sonipat .